Bulgartabac Mafia I

Part 1: Undercover privatization - unique document reveals the dark side of the tobacco holding deal

Much has been written about the privatization of the Bulgarian tobacco holding. After several unsuccessful attempts in the past two decades that failed because of political interference by the party largely representing the Muslim minority in Bulgaria – Movement for Rights and Freedoms (DPS) – the majority stake in the company (79.83%) was sold in September 2011, during the term of the first government Borisov. In documents, the buyer appears as the Austrian company BT INVEST GmbH. The company was established on April 5, 2011, and is a classic “mailbox”. The deal was financed by the investment wing of the Russian VTB Bank, while the now failed Bulgarian private lender Corporate Commercial Bank (CCB) was listed as “consultant”.

The Russian VTB cover-up is run in Bulgaria by brothers Milen Velchev (former Finance Minister) and Georgi Velchev. Most likely, the Russian bank was not included in the scheme pro bono, but against a percentage of the deal that was cashed three years later.

This is on the surface. There are hidden owners, among them politicians who did not declare the ownership. There is dirty money in this deal – a lot of money, very dirty and even illegal. This does not interest Bulgarian law-enforcement authorities. With their actions and inaction they participate in the criminal scheme.

The Mailbox

To this day, the tobacco holding formally belongs to the Austrian company BT INVEST which is a typical “mailbox”. BT INVEST GmbH was entered in the Trade Registry in Austria on April 13, 2011. The capital of the company was 35,000 euro; Dr. Christian Herbst and Dr. Sasha Hödl were listed as managers, and the servicing law firm was the infamous Schönherr. The company is a ready-made standard structure as the ones the firm registers in advance and offers to its customers in order for them not to waste time for the registration of a new company.

On June 3, 2011, the management of BT INVEST was taken by Dr Johannes Pepelnik. On June 28, 2011, the new owner of the company was also declared – VTB CAPITAL PE INVESTMENT HOLDING (CYPRUS) LIMITED. VTB authorized as representatives Bulgarian lawyer with Austrian citizenship Alexandra Doychinova, the Austrian Georg Perkovic and the Bulgarian with Austrian registration George Tsonchev. Thus, three months before the tender for Bulgartabac, the soil was prepared.

History of BT INVEST entries. Source: Austrian Trade Registry

Therealowners?

The next interesting date is August 22, 2011, when the Viennese notary Rudolf Kaindl visited the offices of Schönherr and certified a key agreement with the signatures of lawyers Miriam Simsa, representative of VTB CAPITAL PE INVESTMENT HOLDING (CYPRUS) and Bünyamin Taskapan of FIBEKO Treuhandanstalt, the law office of attorney Andreas Shurti from Liechtenstein.

Taskapan represents the Lichtenstein company LIVERO ESTABLISHMENT and two Liechtenstein foundations: BELOM FOUNDATION and SEDONA FOUNDATION. They signed a confidentiality agreement on the future ownership of BT INVEST GmbH, after the company participated and won the tender for the privatization of Bulgartabac Holding. Bünyamin Taskapan did not answer the questions Bivol sent through the contact form on his professional website.

The contacts addresses of the LIVERO, BELOM and SEDONA foundations are current, a check of Bivol established

The agreement confirms that VTB has created BT INVEST to participate in the tender for Bulgartabac. The company was constituted and the tender documents were purchased. It was specified very early on that VTB reserves the right to dispose of its investment. The listed as “Sponsors” BELOM and SEDONA will provide the opportunity to do so. LIVERO is referred to as Co-Sponsor.

Paragraph 5.2.2 also describes the specific call option – LIVERO has the obligation to acquire the shares of VTB in BT INVEST, “when the right time comes”. With what money? Obviously, with money from the “sponsors” SEDONA and BELOM, two foundations that cannot be found in the Liechtenstein public registry. On the question of Bivol whether they exist, the Liechtenstein Foundation Supervisory Authority officially replied that there are such foundations, but they have the status of “non-registered”. Apparently, the owners do not want to be public, and unfortunately the law in the small Alpine country allows this almost complete anonymity.

It is possible in Liechtenstein to conceal the name of a company or foundation from the public registry, however, the foundations sponsors of the Bulgartabac deal – BELOM, PANIM and SEDONA – do exist.

The agreement also contains annexes which describe the details of the call option, the timeframes, the VTB commissions and other parameters. Unfortunately, we have only the annex listing the persons who may be appointed directors of BT INVEST. And they are quite interesting. The list includes former and current directors of Bulgartabac (Angel Dimitrov, Miglena Hristova) but also persons whose relationship with the tobacco holding is difficult to explain, such as Yavor Draganov – partner of Lyubka Kachakova from the party of former King and Prime Minister Simeon Saxe-Coburg – National Movement for Stability and Prosperity (NDSV), Svetoslav Mladenov – partner of Georgi Krumov from Equest, and two lawyers – Martin Petrov Todorov and Geno Rumenov Andreev. The latter is

a partner in the law firm of attorney Alexander Angelov, considered one of the public faces of controversial lawmaker from DPS, Delyan Peevski, and a cover-up for his involvement in various businesses.

The annex with the names of individuals eligible to be appointed Bulgartabac directors

Схемите се потвърждават

Schemes become confirmed

The document in question, which Bivol has, is extremely important because it proves names and facts known from the correspondence between Alexander Angelov and the majority owner of CCB Tsvetan Vasilev, published in February 2015 (see here in Bulgarian). It contains a detailed diagram of the complex structure of companies in Europe and Dubai, catering to the concealment of the real ownership (see the gallery).

According to the schemes and their explanations, LIVERO has two owners – SEDONA with 45% that is holding the shares of Anton Shterev and Atanas Petrov (AKA “Peshtatsite” – owners of the alcoholic beverage producer Peshtera) and PANIM with 55%, owned by Peevski’s mother Irena Krasteva and Tsvetan Vasilev. BELOM is missing which may mean that the offshore company was replaced with PANIM. A query of Bivol regarding PANIM also received an official response from the Liechtenstein registry that such a “foundation” actually exists.

A letter to US Ambassador in Sofia, Marcie Ries, published by Bivol, claims that there was a corruption commission received by the Honorary Lifetime Chairman of DPS, Ahmed Dogan and current second-term Prime Minister of Bulgaria Boyko Borisov (10% of the capital of LIVERO each) to politically bless the deal. Alexander Staliyski, who belongs to Borisov’s “trusted inner circle”, had also received 10%. According to operational data, the Prime Minister has received his share under a preliminary contract with Peshtatsite – 10% of LIVERO through SEDONA, while Dogan and Staliyski have similar contracts with Vasilev and Irena Krasteva through PANIM.

The political cover-up of the mega deal was materialized through three offshore companies (the three “bullseyes”, as lawyer Angelov calls them in his letter to Vassilev). These are GRAND INVESTORS (Boyko Borisov), INTER PROJECTS GROUP (Ahmed Dogan) and VITALITY INVEST (Alexander Staliyski). The Registry of the British Virgin Islands provides the following information.

All three companies were registered in June-July 2011 (a month before the agreement for the privatization of Bulgartabac). A year later, two of the “front” cover-up companies – VITALITY INVEST LIMITED and INTER PROJECTS GROUP were deleted after they have fulfilled the task of concealing the real participants. The reason was banal – non-payment of annual fees for maintenance in the Registry. In 2013, GRAND INVESTORS LTD was removed for the same reason as well. Our investigation to disclose the real owners of companies that are not recorded in documents received so far from BVI is continuing.

Institutions: We don’t know, we haven’t heard and we haven’t seen

The above information, especially the document for an agreement on a deal behind the State’s back, before the actual privatization of Bulgartabac raises many questions. As one can see, the scheme for the sale of Bulgartabac through murky entities with obscure financing, behind the VTB cover-up, has been prepared in great detail. Had this happened with the full ignorance of all Bulgarian institutions? If such a thing is possible, obviously our legislative framework is open to any mobster to launder dirty money through privatization. So far, the investigation makes it crystal clear that the

institutions in charge such as the Commission for Protection of Competition (CPC), the Financial Supervision Commission (FSC) and the State Agency for National Security (DANS) have not conducted any compulsory study in the origin of the capital and the real persons and entities behind it.